All of this. We only put 5% down and it created a ton of pain with the fourth item on JFizz's list. Make sure you have a very recent 401K statement. I'd also recommend buying something for as much less than you're qualified for as humanly possible. When you get your pre-qualified letters, get them in 10-25k increments so that the seller doesn't know how much you have "in reserve" for negotiation purposes. They'll play hardball with post-inspection negotiation if they know you have room to breathe. Always get a sewer scope. If you have to pick between a radon test and a sewer scope, get the scope.
Location, Location, Location...make sure you are ok with the location! Also what Fizzle said, try to make sure you have 20% down, you dont wanna pay PMI.
20% down will save you a ton of money. You won't have to get mortgage insurance; which accounts for about $50 per month for each $100,000 borrowed. Agree with getting a smaller house for the pre approval. The limit is your max; meaning it will be harder to keep up with. Location is the absolute! A good location and smaller house will work out so much better for you!
These guys are right on avoiding PMI, but there is another way to avoid PMI without paying 20% down. Hence, why I suggest you talk to someone who actually has a clue, instead of us clowns. Not sure where the program stands today, but there was a USDA program that offered some of the best interest rates and required no more than 3% down (and sometimes 0% down) with no PMI. The one caveat is you had to live somewhere considered "rural". As of 2 years ago, Wilsonville, most of Tualatin, and a lot of suburbs that we all would not consider "rural" fell under this program. Hood River is quite likely to still fit into this program (assuming this program still exists). These guys probably had no idea such programs existed. So, I highly advise that you stop listening to us, and talk to someone who knows what they're actually talking about, and are up on all the currently available special programs.
My strategy has been to buy a beat up house in a good neighborhood. You get a discount, and you get to fix it up to your tastes. More upside. I particularly like neighborhoods where all the homes are custom. That way, you can remodel or upgrade as much as you like, without overbuilding for the neighborhood. That is, you don't want to be the only $500K house on a block where all the (nearly identical) houses are $200K.
So i started a new thread the other day about the subject, but basically my work is going to give me an ultimatum and I don't want to move. I've thought about going back to school as an option. I have a BS in Physics, and I've always been good at math. I considered trying to be a CPA or something that uses a lot of math and makes good money. As it stands I don't think I would mind an extremely boring job if it required a good amount of thinking. Do you two have some suggestions on the subject of career choices perhaps similar to yours? Perhaps a required education necessary?
My advice is to buy a duplex, triplex our 4plex. You can use your FHA first time buyers to purchase it but they will only debt load you for your part of the mortgage. Meaning if you buy a 4 plex they will only debt load you for 1/4 of the mortgage because you have 3 other units to get rent from. You may say, "but I don't want to live in a plex!" But after a couple of years the bank we look at this as investment property. Your rents will cover your mortgage so you are a good to get a regular home mortgage for a home you want to live in. Then you'll end up with investment property and a home.
Also I say don't worry about the mortgage insurance. Put as little down as possible. My first 4plex I added a carport, did some landscaping and added a deck and sliding glass doors to two units. Was able to increase rents, had the place reappraised then refinanced all in 6mos and then dumped the mortgage insurance.
So I could be wrong, but I've heard most lenders are very weary of lending for a condo, and typically want a very large percentage down. One of my buddies owns a condo unit and he said it's a pain in the ass for him to sell them because of this. As for other advice, I'd say be prepared to take on all the new bills. Not sure what you currently pay for, but if it's just electricity, all of sudden you'll get water/sewer, garbage, and perhaps natural gas slapped on. Probably equates to $80-120ish for most people so its not a huge amount, but it is something to keep in mind. Also, be ready for unexpected expenses. No more calling the landlord if your refrigerator breaks, heater stops working, etc. Lastly, and this is just my opinion...but if you find the perfect house for you but can't afford the 20% down, don't be afraid of the PMI costs. Yes, paying for PMI sucks, but if you end up skipping that house and end up settling on a less attractive one, that will always eat at you. Besides, it's not THAT expensive...most people get 20% equity within 4-5 years, if not sooner.
In the condo situation, banks are considering the status of other units in the complex, as well as the solvency of the homeowners association.
For most Americans, there are 2 choices. Rent a house, and have nothing to retire on and leave to your heirs. Buy a home, and have a comfortable retirement and leaving your heirs a home.
